Andy Cutbill, head of products and pricing at Lloyds TSB Commercial Banking, explains why with government schemes designed to make access to finance easier for SMEs, businesses can be confident that funding for growth is widely available – and at a discounted cost.

As part of supporting the growth aspirations of UK businesses, Lloyds TSB participates in two key government schemes – the Enterprise Finance Guarantee and the Funding for Lending Scheme. 

As a bank, we’re supporting an SME-led investment and growth strategy to help the UK economy.

Reduced borrowing costs for SMEs

The Funding for Lending Scheme (FLS) was launched by the Bank of England and HM Treasury in 2012 and is designed to improve access to funding for businesses and UK households. The scheme will be open for 18 months until January 2014.

As part of Lloyds TSB’s participation in the scheme, it has reduced the interest rate by 1 per cent on all approved business loan, commercial mortgage and hire purchase applications received after the 10 September 2012 – a rate which will last the whole life of the loan.

This scheme comes at a time when there are exceptional pressures on the UK economy. It was a logical transition for us to support FLS following the £1.4 billion we committed to lend as part of the National Loan Guarantee Scheme which FLS replaced. 

Funding for SMEs without security

The Department of Business, Innovation and Skills (BIS) set up the Enterprise Finance Guarantee (EFG) in 2009. The scheme was established to improve access to funding for eligible SMEs with viable propositions, that may lack adequate security, or those that don’t have a proven track record to meet the criteria for a typical commercial loan. 

We’ve been involved in this scheme from the start. It’s a great support mechanism for customers who we would normally lend money to but who do not have security available to support their lending request.

The scheme is designed to support businesses with working capital, expansion plans, diversification or development of their business. Examples could include developing a new project, expanding their business to improve efficiency or even buying a business, equipment or property. 

One business that has secured loans under the EFG is Lloyds TSB Commercial Banking customer Care at Home Services, which was accepted for an Enterprise Finance Guarantee loan to help them acquire another business. 

‘EFG loans are particularly suited to SME businesses like Care at Home Services. Businesses can borrow between £25,000 and £1 million and repayments can be spread over one to ten years,’ Andrew Clark, relationship director with Lloyds TSB Commercial Banking, explains.

Lloyds Banking Group are an active lender under the EFG scheme, and by the end of December 2012 had offered more than 5,200 EFG loans, worth more than £402 million – 26 per cent of all loans granted through the scheme so far.

Count on your bank

Securing finance is only part of the story. ‘It is important for businesses to work with a bank that really understands their business and the market in which they operate,’ states Andy.  

‘This close relationship and understanding is key to working through a business cycle. Our relationship managers can provide relevant support and guidance to help them find the right products and services – from enhancing day-to-day cashflow to longer-term borrowing requirements or sector specific needs.’ 

For further information on either the Funding for Lending Scheme, or Enterprise Finance Guarantee or to use our finance selector and loan calculator tools, please visit here.

All lending is subject to satisfactory credit assessment.

Lloyds TSB Commercial is a trading name of Lloyds TSB Bank plc and Lloyds TSB Scotland plc and serves customers with an annual turnover of up to £15 million.

This content has been provided by Lloyds TSB, part of the Lloyds Banking Group.

The Lloyds Banking Group includes Bank of Scotland plc and a number of other companies using brands including Lloyds TSB, Halifax and Bank of Scotland, and their associated companies.